Detroit may file $18 billion bankruptcy plan in 2 weeks

Detroit Emergency Manager Kevyn Orr may file a proposed debt-adjustment plan in federal court in about two weeks, an action that would start the final phase in the city's record $18 billion municipal bankruptcy.

Orr has given a copy of the plan to creditors, his spokesman, Bill Nowling, said Wednesday in an emailed statement. Creditors will have a chance to vote on the proposal once it's filed in U.S. Bankruptcy Court in Detroit and found by the judge to supply enough information.

The plan reflects details already presented to creditors who have been negotiating with the city since it filed for bankruptcy in July, Orr said. U.S. Bankruptcy Judge Steven Rhodes had told the city he wanted it to file a plan by March 1.

"The longer we remain entrenched in our positions and fail to reach an agreement, the worse life gets for Detroit's 700,000 residents and the greater our collective challenges become," Orr said in the statement, which didn't supply any details of the proposal.

Since it filed the biggest municipal bankruptcy in U.S. history, the city has fought in court with municipal unions, retired city workers and bondholders over potential cuts, while also meeting them in confidential mediation sessions overseen by Gerald Rosen, the chief federal judge in Detroit.

Those talks have yielded about $470 million in pledges from the Detroit Institute of Arts and a group of civic foundations that support the museum. The money would be used to support the city's underfunded pensions so long as the museum's collection is protected from creditors.

Michigan Gov. Rick Snyder has proposed that the state spend $350 million for the same purposes.

The plan will "take the temperature of creditors," said Doug Bernstein, a bankruptcy lawyer at Plunkett Cooney PC in Bloomfield Hills, who represents one of the foundations. "Expect more posturing. Everyone is trying to do the best job they can to get the most for their client."